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Chris The Lawyer
Chris The Lawyer, Lawyer
Category: New Zealand Law
Satisfied Customers: 14437
Experience:  37 years qualified as a lawyer; LLB, MMgt and FAMINZ.
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My wife an I are in our late 70's, active and of good

Customer Question

My wife an I are in our late 70's, active and of good health, we expect to continue this way until our late 80's. How much can we gift to our children each year without effecting our residential care subsidy.
Submitted: 1 year ago.
Category: New Zealand Law
Expert:  Chris The Lawyer replied 1 year ago.

Gifting can be done in one transaction now that gift duty has been abolished (in 2011) which is when you should have completed gifting), so if your home is in trust, it will be outside of the residential care subsidy in three years. The subsidy and application looks back 5 years, so any gifts made 5 years before the application can be clawed back into your own property. If you want to gift other money then the 5 year rule still applies.

  • Abolishing gift duty was a change in the Estate & Gift Duties Act. There was no equivalent change in social security legislation.
  • Entitlement to MSD benefits and subsidies is generally administered through the Social Security Act 1964, not the Estate & Gift Duties Act and not any taxation Act for that matter. There are key differences in how income is defined between these Acts. Income for benefit purposes is different to income for tax and duty purposes.
  • The social security system operates on the principle that people should look to their own resources first before seeking assistance from the state.
  • Under the Act, there is no ‘allowable gifting’ amount for general benefits. All available resources are required to be used to help the client support themselves. This approach did not change with the abolition of gift duty. It is a separate Act.
  • Residential Care Subsidies have a small amount of allowed gifting, per application. From 1 July 2011, allowed gifts are $6,000 per year per application (to 30 June 2011: $5,500) for gifts made in any of the last five years, and $27,000 per year per application for gifts made more than five years ago. This $27,000 gift allowance is not averaged over missed years.

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